Multi level Marketing (MLM)
                     MULTI 
LEVEL  
MARKETING 
 (MLM)
MULTILEVEL 
 
MARKETIN
A GBUSINESS STRaTEGY KNOwN aS mULTILEvEL maRKETING  
(MLM) ENTaILS HIERaRCHICaL, UNPaID SaLES TEamS SELLING  
GOODS DIRECTLY TO CUSTOmERS wHILE aLSO HIRING NEw  
FIRm SaLES REPRESENTaTIvES. MULTILEvEL maRKETING IS aLSO 
 KNOwN aS NETwORK maRKETING aND REFERRaL maRKETING
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MLM SaLES TEamS USUaLLY HIRE FEmaLES, YOUNG PaRENTS, OR aNYONE LOOKING
WORKING  FOR aLTERNaTIvE EmPLOYmENT. MLM COmPaNIES aTTRaCT SaTISFIE
EXISTING  CUSTOmERS TO SELLBY OFFERING THEm D  
OF  OFRPEPEODROTmUNITIEaSN. DTHNEE HwYPOTHESIS THaT CLIENTS COULD BE mORE PRONE BTUOS INESROENL YTHEIR FRIENDS aND aCQUaINTaNCES aS REPRESENTaTIvES THaN COSmPLETE  
mULTILEvEL STRaNGERS SELLING THE ITEmS IS a  KEY COmPONENT OF aN MLM maRKETING PLaN. 
 THE FRIENDS aND FamILY OF REPRESENTaTIvES wHO USE THEIR COmmUNITIES 
 TaSHEIR CONSUmER BaSE maY aLSO BE QUICK TO SUPPORT THEIR
BUSINESS  ENDEavOURS.
maRKETING
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IS MULTILEVEL  
MARKETING 
LEGAL?
MULTILEvEL maRKETING IS 
LEGaL IN THE U.S. aND mOST 
COUNTRIES. IT IS BaNNED  IN 
SOmE OF COUNTRIES, SUCH 
aS BaNGLaDESH, CHINa aND 
SaUDI ARaBIa. WHILE  LEGaL 
IN THE UNITED STaTES, THE 
MLM BUSINESS PRaCTICE IS 
OFTEN CONSIDERED  
CONTROvERSIaL BECaUSE IT 
CaN USE PREDaTORY 
RECRUITING TECHNIQUES aND 
 UNPaID LaBOR OF ITS SaLES 5
REPRESENTaTIvES. THE MLM 
BUSINESS STRaTEGY HaS  SO 
maNY aNaLOGY TO a 
PYRamID SCHEmE, wHICH IS 
ILLEGaL IN mOST COUNTRIES.
WHaT IS THE DIFFERENCE BETwEEN mULTILEvEL maRKETING aND a  PYRamID 
SCHEmE?
THE majOR DIFFERENCE BETwEEN aN MLM aND a PYRamID SCHEmE IS  
wHETHER IT FaLLS UNDER THE DEFINITION OF a  LEGaL maRKETING 
STRaTEGY.  IN ESSENCE, MLM STRaTEGIES aRE LEGaL wHILE PYRamID 
SCHEmES aRE NOT.
MajOR DIFFERENCES BETwEEN MLM aND ILLEGaL 
PYRamID  SCHEmES INCLUDE THE FOLLOwING:
PYRamID SCHEmES ENLIST aS maNY PEOPLE aS POSSIBLE INTO THEIR SaLES TEamS IN  
ORDER TO PROFIT FROm THE INvESTmENTS OF THEIR NEwEST aSSOCIaTES, wHEREaS MLM 
 TaCTICS ENLIST aS maNY PEOPLE aS POSSIBLE INTO THEIR SaLES TEamS IN ORDER TO 
SELL  aS maNY ITEmS aS POSSIBLE.
PYRamID SCHEmES DEmaND a vERY SUBSTaNTIaL INvESTmENT BEFORE a  BUSINESS 
OwNER  CaN EvEN SIGN a CONTRaCT TO STaRT wORKING FOR THEm. THE SaLES TaCTICS 
maY  REQUIRE a  SaLES REPRESENTaTIvE TO BUY a  mINImUm NUmBER OF THEIR 
PRODUCTS.
IN CONTRaST TO PYRamID SCHEmES, wHICH PLaCE LITTLE TO NO EmPHaSIS ON THE 
END  USER, MLM BUSINESS mETHODS INvOLvE RESEaRCH aND a STRaTEGY TO FOCUS 
ON a   TaRGET CUSTOmER FOR REPRESENTaTIvES TO SELL TO.